Iron ore prices hit a low of US$86.70 a tonne on September 5. Photo: Reuters

BHP Billiton, the world's largest mining firm, says growth in the mainland's demand for iron ore has slowed by more than half, highlighting the economic slowdown in the world's biggest importer of the steel-making commodity.

"We're already seeing the beginning of the end of the first phase of economic development in China," said Alberto Calderon, the Melbourne-based firm's chief commercial officer and manager of its aluminium and nickel business, at a conference in Canberra. "The pace of demand for iron ore from China has slowed down by more than half."

The mainland's steel output grew 2.3 per cent year on year in the first eight months of this year, less than a third of the 7.3 per cent growth pace seen last year, as a tightening of credit for property and infrastructure projects saw substantially slower demand for base metals.

Each tonne of steel output requires 1.6 tonnes of iron ore. Due to the poor quality of domestic ore, the mainland's reliance on imports is forecast to rise from around 70 per cent this year to over 90 per cent in 2015, according to a research report from France-based investment banking group CLSA.

The international benchmark price of iron ore with 62 per cent of iron content plunged by around 37 per cent from April to a low of US$86.70 a tonne on September 5 due to weak global steel demand and prices, the lowest since October 2009.

It has since rebounded by around 27 per cent to almost US$110 a tonne, after Beijing approved more than US$150 billion worth of highways, ports and airport runway projects, which improved the prospect of steel demand.

BHP last month shelved US$20 billion worth of planned expansions at its Olympic Dam copper and gold mine in Australia and suspended all other project approvals amid an uncertain demand outlook.